I would like to put forth my case for buying SXY, and why i'm bullish on the stocks prospects.
I don't normally cover oil and gas shares, but this was an exception. First and foremost, it has high margins in its oil production business (producing for under $30 a barrel), and is well positioned to benefit from a coal seam and unconventional gas boom.
Fundamentals: - No debt, strong capital position - Explosive earnings: FY13 earnings up almost eight-fold from 2012 - Moderate cash flow, however this is indicative of the mining industry (They need to spend a lot of money to make money) - Moderately priced: P/E <15 and P/B of 2.0
A quick look of the company's FY14 half year results suggest that the company is on track to at LEAST earn the same FY14 profit as FY13. My only problem with the company is the fact that they don't pay dividends considering the substantial increase in profits and cash flow in FY13.
IMO, i don't feel as though the substantial increase in earnings or its upside potential has been fully reflected in the share price yet, and i believe there to be substantial upside in the coming months and years. Nonetheless, please feel free to add any opinions you may have!
SXY Price at posting:
79.2¢ Sentiment: Buy Disclosure: Not Held
